All Forum Posts by: Joshua Myers

@Jazlynn Gibbs

I've been thinking about this a lot. Even if there is a recession in the next 12-24 months, it's not going be a crash like 10 years ago. 

For one thing, short term liquidity isn't going to dry up to the extent that we saw back then. The data is a little stale, but the Fed bank of Minneapolis estimates banks are holding more than $2 trillion in excess reserves.

There is also a lot of liquid capital on the sideline looking for somewhere to go. According to the FT, private equity has $2.4 trillion in dry powder. Not all of that will be available in a serious downturn, but it's a good indication of money out there waiting for higher returns.

That doesn't mean there won't be a cyclical slowdown or some external shock to the economy. It just means it is unlikely that asset prices prices will collapse as significantly as before.

It all depends on what you're looking to do. Columbus has $20k crack shacks in war zones and $20 million dollar mansions. There are areas that are going through some rapid gentrification, and there are stable areas with good schools. If you want to know areas for anything specific fell free to PM me. 

@Daniel Mendez the Columbus market is booming, but it is also incredibly competitive right now. It’s not a market where you can just come in with funds, talk to a realtor, and get 15% coc. I’m not sure of your experience and goals, but you should temper your expectations.

Have you ever been to Columbus?

Warren, was this bought as an investment property or as your primary residence? I know the area. If you bought it as a primary residence then it's not overpriced. You didn't get a deal on it, but that's around market value.

On another note, you aren't really partnering with something in real estate investment if they buy properties without your knowledge and against your consent.

@Jack B. The cost and terms of financing are part of your deal analysis. If the deal makes sense with the financing terms available, then it's a good deal. If the best available financing make the investment too risky or kills the cash flow, then it's not a good deal. The good news is that you're already FI, so you don't need to rush into any bad deals.

1. Does it mean that the reason why treasury rate falls is that the economy becomes weaker? Is it the only reason and what could be other reasons?

- This is a very complex question that takes a long time to understand. It's very unlikely that any answer in a forum will give you an acceptable understanding or the interactions between short term interest rates, the real economy, and markets.

2. When T rate falls, so the other interest rates.

- Short term interest rates are set by Central Banks. In the US, that's the Federal Reserve. The overnight rate has a strong influence on longer dated maturities. The recent yield curve inversion shows that other factors also play a roll. Some of those are market liquidity, investor and consumer expectations, supply and demand money and government debt.

3. That means that a buyer can buy more and pay less interest of that.

- Yes. Lower interest rates mean lower interest payments.

4. That means that RE market strengthens (Why? Just the fact that people CAN buy houses at a lower rate, and people buy more of those doesn't mean that RE market became stronger? Or it does?

- The real estate market doesn't always strengthen when short term interest rate decline. Since there are various reasons that long term interest rates decline, there are various potential outcomes.

5. If RE market strengthens it has a positive effect on the economy(why?) and creates more jobs(why?)

- The real estate market provides millions of jobs to contractors, builders, plumbers, etc. Also, most Americans have a significant amount of their personal wealth attached to their primary residence. Increases in net worth lead to the wealth effect, normally causing an uptick in large personal expenditures.

Obviously something is going on in the economy that is leading to the yield inversion, but I don't think it's as simplistic as everyone getting drunk and over leveraging on low interest rates. Household debt is a little high, but debt service costs aren't that much of a worry right now. The student loan "crisis" is an issue, but the media are making it seem like a bigger drag on the economy than it is in reality.

The more likely answer is that the aggressive measures from the ECB, Japan and, to a lesser extent, Swizterland are behind the recent price movements. These central banks are creating money to buy government (and corporate) debt faster than it can be issued. This is pushing private capital out of these markets. That capital needs somewhere to go, preferably risk free, positive yield government debt denominated in a stable currency......AKA 10 and 30 year US treasuries. It's a supply and demand issue. 

The thing to look for is how the yield curve responds to:

1. The next ECB shock and awe program in September

2. The deficit induced trillion dollar US bond sales about to hit the market 

You're 100% right. We're selling a vision. We've just spent 6 months working on the details and thinking about how someone will use the space. The buyer is walking into the space for the first time, and is going to go through it for 30-60 minutes. Also, depending on your price point, this might be the first time the buyer is looking at a house with a critical eye.

@Sean M. I've listed with staging and without. My staged flips generally sell quicker and normally at or above asking price. Based on showing feedback, it sounds like buyers walking through an unstaged house are seeing every flaw while those walking though a staged house are seeing how they could be living in the space.

As far as the price, it's just one of the costs I factor in at the beginning of the project.

@Account Closed did you transition to a portfolio lender before exhausting your other options?